Zach Barlow recently noted on the PracticalESG blog that 23 State Attorneys General sent a letter to Fitch, Moody’s, and S&P Global addressing downgrades of the credit ratings for fossil fuel companies. In the letter, the AGs claim that that the ratings agencies have unjustly and unlawfully used ESG criteria in their credit rating decisions. For example, the letter states:

Based on the same flawed “energy transition” and “increasing regulations” ESG predictions, S&P claimed that fossil-fuel-producing states’ economies were only improving “for now,” and projected that those states would face a more “prolonged economic recovery,” lagging behind other states. The Ratings Agencies continue to use ESG factors to weigh down ratings for fossil-fuel-producing states and municipalities, even after the Ratings Agencies’ ESG-driven predictions have proven to be incorrect. These methodological departures and conflicts of interest harm state economies, tax revenues, and investments.

Zach notes in the blog:

The AGs allege that ratings agencies adopted undisclosed UN PRI pledges. They argue that this, in conjunction with the agencies’ ESG consulting arms, created conflicts of interest in violation of SEC rules. They are requesting that the ratings firms withdraw from ESG commitments. Along with the letter, the AGs provide a list of 27 interrogatories that ask about how firms consider ESG factors in their credit ratings. The AGs warn that if their demands are not met, they will bring state legal action or refer the credit agencies to federal regulators.

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– Dave Lynn